Southern Arc Minerals continues to advance discussions with a number of companies for a potential farm-in, partnership or outright sale of the West Lombok Gold, Silver and Copper Project.
Since releasing the West Lombok resource estimate in July 2013 showing an inferred resource of 1.49 million ounces of gold, 1.82 million ounces of silver and 397.3 million pounds of copper, Southern Arc has maintained low-level activities at West Lombok.
While Southern Arc believes the project holds great potential, the company has determined that it can more effectively build shareholder value by identifying a funding partner for West Lombok and redirecting the company’s treasury to high-quality projects in stable jurisdictions.
The company also has the 9670 hectare East Elang property on Sumbawa Island, to the east of Newmont’s Elang-Dodo property, which hosts a large copper-gold porphyry deposit. In October 2010, the company entered into an option and joint venture agreement with Vale to advance the property. Vale can earn a 75% interest in PT Selatan Arc Minerals by funding exploration through to completion of a bankable feasibility study.
On the property 60.3% of the area is designated primary forest. The Indonesian government has imposed a moratorium on exploration and mining activities in areas designated as primary forest, and has extended this to May 2015.
While the property is considered highly prospective due to its location and results from aerial surveys, exploration has been deferred pending reclassification of the property’s forestry status and receipt of the appropriate permits. Southern Arc has requested reclassification of the property and has applied to Regency authorities for suspension (back-dated from the commencement of the forestry moratorium in May 2011) of the IUP licence until the reclassification process has been completed, to ensure Southern Arc and Vale have adequate time to evaluate the property once exploration commences.
In December 2012, following a strategic review of the company’s projects and exploration strategy, the company agreed to sell its 90% interest in the Taliwang project also on Sumbawa. In February 2014, Southern Arc and the purchaser renegotiated the terms of the purchase and sale agreement, whereby the purchaser will purchase Taliwang in exchange for US$1.6 million and the granting of a 5% net smelter royalty to Southern Arc. The purchaser has the option to buy back 3% of the net smelter royalty by paying Southern Arc US$3 million.
As a result of the renegotiation, Southern Arc has recognized an additional $1,889,096 of impairment provision against its book value of the property. To date, the purchaser has made payments totalling US$700,000.
Southern Arc is a Canadian mineral exploration company focused on gold and copper-gold exploration. As well as the West Lombok and East Elang properties, the company owns 27% of Eagle Hill Exploration, which owns the high-grade Windfall Lake Gold Project in Quebec, Canada. www.southernarcminerals.com